# S. N. NAMASIVAYAM CHETTIAR v. THE COMMISSIONER OF INCOME-TAX

- **Citation:** [1960] 2 S.C.R. 885
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Case number:** Civil Appeals· No. 218 of 1955
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/s-n-namasivayam-chettiar-v-the-commissioner-of-income-tax-1795
- **Pages:** 12

## Headnote

)
...
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S.C.R.
SUPREME COURT REPORTS.
885
or the lawyer we are not directly concerned in the
1,60
present appeal.
We have, however, referred to this
decision because, in the course of discussion, the State of llombay
learned judge has expressed his dissent from the view.
The ;;~spital
taken by the Bombay High Court in regard to Mazdoor Sabha
hospitalE<, and we wish to make it clear that, in ou.r · ... -
·
opinion, the criticiEm made by the learned judgeGayendragadkar J .
against the inclusion of hospitals within s. 2(j) is not
well-founded.
Dealing with a similar case of an
attorney, the Bombay High Court ha.s taken the same
view in National Union of Commercial Employees &
Anr. And Meher (M.R.) & Ors. (Pereira Fazalbhoy &
Co.)(1).
We would accordingly hold that the High Court was
right in holding t.hat the dispute between the appellant and the respondents was an industrial dispute to
which s. 25F of the Act applied. The order passed by
the High Court on the writ petition filed by the respondents is confirmed· and the appea.l is dismissed with
costs.
Appeal dismissed.
S. N. NAMASIVAYAM CHETTIAR
v.
THE COMMISSIONER OF INCOME-TAX, .
MADRAS
(With connected appeals)
(J. L. KAPUR AND M. HIDAYATULLAH, JJ.) ..
Income Tax-Assessment-Rejection of accounts and estimate of
profits-C amputation of profits supported by cases of other assesseesStock register-Effect of non-production-In'dian Income-tax Act;.
r922 (XI of r922) s. I] proviso.
The appellant, a resident and ordinarily resident in India,
carried on trade in Colombo in grains and foodstuffs for cattle.
For the relevant assessment years the Income-tax Officer rejected
the acr.ounts produred by the appellant on the grounds inter alia
that there was absence of vouchers and that the stock account
and the manufacturing account had not been kept or produced ·
and he then made an estimate of the profits.
The Appellat~
Tribunal also agreed with the Income-tax Officer and held that
the correci: profits could not be deduced from the books produced
by the assessee and that therefore the proviso to s. 13 of the
(r) \19~9} II L.L.J. 38.
1960
February, 3
886
SUPREME COURT REPORTS [1960(2))
Indian Income-tax Act, 1922 applied. I-faving taken into consi-
-.
deration all the relevant factors it computed the profits at 15 %
S.N. Nam~sivayam on grains imported from India and 12!% on grains purchased in
Chetttar·
Ceylon, and, in support of its computation, it pointed out that in
v.
certain cases which had come to its notice the rates of profits
The Commissioner went up to zo%.
0! Income-Tax,
The appellant challenged the validity of the assessment on
Madras.
the ground that the principle of natural justice had been violated
in that the Tribunal had taken into consideration the rate of
profit in other cases without giving an opportunity to the appellant to explain those cases, and relied upon Dhakeshwari Cotton
Mills Ltd. v. The Commissioner of Income-tax, West Bengal.
[1955]
r S.C.R. 94r. He also urged that the non-production of stock
account was not such a defect as to entitle the Taxing Authorities
to reject the books and apply the proviso to s. 13 of the Act.
Held: (r) that the percentage of profits made by traders in
other cases was not the basis made by the Tribunal for arriving
at any conclusion as to the percentage at which income should be
computed in the present case, but was merely an ancillary support
to that conclusion and that Dhakeshwari Cotton Mills Ltd. v. The
Commissioner of Income-tax, West Bengal, was not applicable to
the case.
(2) that the keeping of a stock register is of great importance
because that is a means of verifying the assessee's accounts by
having a quantitative tally; that if, after taking into account all
the materials including the want of a stock register, it is found
that from the method of accounting correct profits of the business
are not deducible, the operation of the proviso to s. 13 of the
Act would be attracted.
Ghansyam Das Permanand v. Comniissioner of

## Text

)
...
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•
S.C.R.
SUPREME COURT REPORTS.
885
or the lawyer we are not directly concerned in the
1,60
present appeal.
We have, however, referred to this
decision because, in the course of discussion, the State of llombay
learned judge has expressed his dissent from the view.
The ;;~spital
taken by the Bombay High Court in regard to Mazdoor Sabha
hospitalE<, and we wish to make it clear that, in ou.r · ... -
·
opinion, the criticiEm made by the learned judgeGayendragadkar J .
against the inclusion of hospitals within s. 2(j) is not
well-founded.
Dealing with a similar case of an
attorney, the Bombay High Court ha.s taken the same
view in National Union of Commercial Employees &
Anr. And Meher (M.R.) & Ors. (Pereira Fazalbhoy &
Co.)(1).
We would accordingly hold that the High Court was
right in holding t.hat the dispute between the appellant and the respondents was an industrial dispute to
which s. 25F of the Act applied. The order passed by
the High Court on the writ petition filed by the respondents is confirmed· and the appea.l is dismissed with
costs.
Appeal dismissed.
S. N. NAMASIVAYAM CHETTIAR
v.
THE COMMISSIONER OF INCOME-TAX, .
MADRAS
(With connected appeals)
(J. L. KAPUR AND M. HIDAYATULLAH, JJ.) ..
Income Tax-Assessment-Rejection of accounts and estimate of
profits-C amputation of profits supported by cases of other assesseesStock register-Effect of non-production-In'dian Income-tax Act;.
r922 (XI of r922) s. I] proviso.
The appellant, a resident and ordinarily resident in India,
carried on trade in Colombo in grains and foodstuffs for cattle.
For the relevant assessment years the Income-tax Officer rejected
the acr.ounts produred by the appellant on the grounds inter alia
that there was absence of vouchers and that the stock account
and the manufacturing account had not been kept or produced ·
and he then made an estimate of the profits.
The Appellat~
Tribunal also agreed with the Income-tax Officer and held that
the correci: profits could not be deduced from the books produced
by the assessee and that therefore the proviso to s. 13 of the
(r) \19~9} II L.L.J. 38.
1960
February, 3
886
SUPREME COURT REPORTS [1960(2))
Indian Income-tax Act, 1922 applied. I-faving taken into consi-
-.
deration all the relevant factors it computed the profits at 15 %
S.N. Nam~sivayam on grains imported from India and 12!% on grains purchased in
Chetttar·
Ceylon, and, in support of its computation, it pointed out that in
v.
certain cases which had come to its notice the rates of profits
The Commissioner went up to zo%.
0! Income-Tax,
The appellant challenged the validity of the assessment on
Madras.
the ground that the principle of natural justice had been violated
in that the Tribunal had taken into consideration the rate of
profit in other cases without giving an opportunity to the appellant to explain those cases, and relied upon Dhakeshwari Cotton
Mills Ltd. v. The Commissioner of Income-tax, West Bengal.
[1955]
r S.C.R. 94r. He also urged that the non-production of stock
account was not such a defect as to entitle the Taxing Authorities
to reject the books and apply the proviso to s. 13 of the Act.
Held: (r) that the percentage of profits made by traders in
other cases was not the basis made by the Tribunal for arriving
at any conclusion as to the percentage at which income should be
computed in the present case, but was merely an ancillary support
to that conclusion and that Dhakeshwari Cotton Mills Ltd. v. The
Commissioner of Income-tax, West Bengal, was not applicable to
the case.
(2) that the keeping of a stock register is of great importance
because that is a means of verifying the assessee's accounts by
having a quantitative tally; that if, after taking into account all
the materials including the want of a stock register, it is found
that from the method of accounting correct profits of the business
are not deducible, the operation of the proviso to s. 13 of the
Act would be attracted.
Ghansyam Das Permanand v. Comniissioner of Income-tax
C.P. & Berar (1952) 21 I.T.R. 79, Bombay Cycle Stores Company
Ltd. v. Commissioner of Income-tax.
(r958) 33 I.T.R. 13 and
Commissioner of Income-tax v. McMillan and Co. [1958] S.C.R.
689, relied on.
CIVIL APPELLATE JURISDICTION:
Civil Appeals·
No. 218 of 1955 and 219 to 223 of 1955.
Appeal by special leave from the judgment and
. Order dated September 14, 1951, of the Income-tax
Appellate Tribunal, Madras, in LT.A. No. 3158 of
1949-50.
and
Appeals by special leave from the judgment and
order dated September, 30, 1953, of the Income-tax
Appellate Tribunal, Madras, in LT.A. Nos. 7840 of
1952-53 and E.P.T.A. Nos. 300, 301 and302of1952-53.
S. Chowdhuri, N. A. Palkhivala and Naunit Lal,
for the appellant,
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S.C.R.
SUPREME COURT REPORTS
887
H. N. Sanyal, Additional Solicitor.General of India,
r960
R. Ganapathi Iyer and D. Gupta for the respondent.
5 "
N
.
. 1v.
an1-asivayam
1960 February 3.
The Judgment of the Court was
Chettiar
delivered by
v.
•
Commissioner of
KAPUR J. - In these SIX appeals the common quesIncome-Tax,
tion raised is whether the proviso to s. 13 of the
Madras.
Income-tax Act is applicable to the facts and circumstances of these cases. They are therefore disposed
Kapur J.
of by one judgment. Civil Appeal No. 218 of 1955
arises out of the assessment for the year 1943-1944.
Civil Appeals Nos. 219 to 223 relate to the assessment
years 1944-1945, 1946-1947 and for the chargPahle
accounting periods from January 1943 to February
1944, and from February 1945 to February 1946.
The appellant in each of the appeals is the assessee
and the respondent is the Commissioner of Income-tax
and Excess Profits Tax, Madras.
The appellant is a 'resident and ordinarily resident'
in India and carried on extensive trade in Colombo in
grains, folder, gram and other food-stuffs for cattle
and poultry. For the assessment year 1943-1944 the
appellant showed a turnover of Rs. 17,74,825 and a
gross profit of Rs. 63,217 which is about 3·5 per cent.
:E'or the two previous assessment years the appellant's
gross profits were 9 per cent and 8 per cent respectively. The Income-tax Officer, by his order dated
March 20, 1948, rejected the accounts and estimated
the gross -profit by adding back Rs. 2,38,831 to the
returned income. Thus he raised the turnover to
Rs. 20,00,000 and the gross income to Rs. 3,00,000
giving a profit of 15 per cent on the estimated turnover. On appeal to the Appellate Assistant Commissioner, the order of the Income-tax Officer was
confirmed. The Income-tax Appellate Tribunal on
appeal by its order dated September 14, 1951, after
pointing out various defects, rejected the account
books but accepted the appellant's turnover and
computed the profits at 15 per cent on grains imported from India and 12! per cent on grains purchased
in Ceylon. It held that correct profit for the year
under assessment could not be deduced from the books
produced by the appellant. The Excess Profits tax
u~
888
SUPREME COURT REPORTS [1960 (2))
r96o
for the chargeable accounting period from February 10,
-
.
1942 to January 16, 1943, was decided on the basis of
S.N. Namaswayam h I
.c
h
3
O
Chettiar
t e ncome-tax assessment J.Or t e year 194 -44.
n
v.
November 21, 1951, the appellant applied to the
Commissioner of Tribunal for stating a case under s. ·66(1) on the
Income-Tax,
following four questions :
Mad.as.
(1) Whether under the circumstances of the case
Kapur].
the Tribunal was justified in holding that Section 13
of the Indian Income-tax Act applies to the case.
(2) Whether the reasons set out by the Appellate
Tribunal in paragraph 2 of its judgment are sufficient to invoke Section 13 of the Act.
(3) Whether the Tribunal, having disagreed with
the department on the basis of the assessment, had
jurisdiction to apply Section 13 and make an assessment on an alleged estimate.
( 4) Whether the Tribunal was justified in making
an assessment on the basis of Section 13 without
giving an adequate opportunity to the assessee to
meet the materials upon which eventually the assessment was rested.
But the Tribunal, by its order dated February 12,
1950, held that no question of law arose and therefore declined to state a case and thus rejected the
application. The appellant then applied to the High
Court of Madras under s. 66(2) of the Act on the
same four questions of law.
This application was
dismissed by the High Court on February 26, 1953.
Against this order of the appellant applied for special
leave to appeal and, by leave of this Court, amended
the petition so as to make it an appeal against the
order of the High Court as well as the order of the
Tribunal dated September 14, 1951.
In the other appeals also the course of proceedings
before the Income-tax Officer, the Appellate Assistant
Commissioner and the Income-tax Appellate Tribunal
was the same. For the assessment years 1944-1945
aud 1946-47 the appellant disclosed a turnover of
Rs. 10,35,748 and Rs. 5,98,728 respectively and the
gross profits rates were 10·7 per cent and 8·7 per cent
respectively.
As the hooks of accounts in regard to
these years also were rejected, the Income-tax Appellate Tribunal applied s. 13 and estimated the gross
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S.C.R.
SUPREME COURT REPORTS
889
profit rates at 12! per cent and 10 per cent for the
r960
respective years.
The appellant applied to the
-
.
T "b
l
d
66(1)
f h
A t .c
•
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S.N. Namasivayam
n una _un er s.
~ t e .. c .1.or statmg a case
Chettiar ·
to the High Court for its dec1s10n on the following
v.
two points:
Commissioner of
(1) Whether on the facts and in the circumstances
Income-Tax,
of the case, the Department was right in acting
· A!adras.
under the proviso to section 13 of the Act in the ·
Kapur J.
absence of a finding that income, profits and gains
cannot properly be deduced from the books produced or that. no method of accounting has been
regularly employed.
(2) Whether on the facts and in the circumstances
of the case, the Department hatl sufficient materials before it to justify the rates of 12! per cent
and 10 per cent gross profits on the total turnover
on the ground that the rates worked out by the
figures submitted by the assessee work out at a
lesser figure.
The Tribunal dismissed the application on January 15,
1954. The appellant did not apply to the High
Court under s. 66(2) of the Income Tax Act but
obtained special leave from this Court against the
order of the Tribunal by which it applied the proviso
to s. 13 of the Income Tax Act. All the six appeals
were heard together and a common question arises
whether the Income tax Appellate Tribunal was
justified in applying the proviso to s. 13 of the
Income Tax Act.
.
It was contended by the appellant in Civil Appeals
Nos. 218, 219 and 221 of 1955 that the Income-tax
Appellate Tribunal was not justified in applying the
proviso to s. 13 and assuming that the proviso did
apply then the percentage worked out was unjustified
and had been arrived at by relying upon material
which the appellant had no opportunity to meet and
therefore the case fell within the rule in Dhakeshwari
Cotton Mills Ltd. v. The Commissioner of Income-tax,
West Bengal (1 ) where a similar violation of the
fundamental rule of natural'justice-i.e., the information upon which the Tribunal relied was not disclosed
.to the assessee and no opportunity was gjven_ to. him
(I) (1955] I S.C.R. 941, '
890
SUPREME COURT REPORTS [1960 (2)]
I960
to rebut 8uch material-was held to be a ground
for intArference with the order of the Tribunal.
S.N. J\Tamasivayam
CJ"ttiar
It was rightly argued that the power to compute
v.
profits under the proviso to s. 13 arises only where no
Commission" of method of accounting bas been regularly employed
Income.Tax,
J
d
•
h
b d
]
d ·
Madrns.
by t rn assessee an
wnere t e met o emp oye
IS
such that the income, profits and gain cannot properly
Kapur J.
be deduced therefrom. It means that the method
adopted by the assessee must prima facie prevail
where it is regularly employed, though the Income.
tax Officer can resort to the proviso if the method is
such that true profits cannot be correctly determined
therefrom. In other words, even if the assessee has
regularly employed a method of accounting it can be
discarded under the proviso if the method does not
show correct profits of the year.
The Appellate Tribunal, by its order dated
September 14, 1951, held that correct profits could not
be deduced from the hooks produced by the assessee
and therefore the proviso to s. 13 of the Income Tax ·
Act applied. The reasons it gave were (1) that
vouchers for several purchases made in Colombo had
not been produced and for purchases of over
Rs. 3,00,000 no vouchers were forthcoming and without the vouchers the entries in the account books
could not be verified; (2) there was no quantitative
tally for the grains and for other materials purchased
by the appellant, which were ground into powder,
turned into fodder, packed in different sizes and then
sold. It was not possible, according to the Tribunal,
t.o accept the books of account, where the turnover
was as large as about seventeen lacs of rupees,
without a quantitative tally ; (3) a fairly big sum of
money was alleged to have been paid towards purchasing of licenseR for export from India; and Rs. 19,000
worth of purchases were made in Tuticorin when only
a small sum of money in cash was shown in the
assessee's accounts; (4) several outsiders' cheques had
been entered in the accounts of the assessee without
any proof as to why those cheques were paid to the
assessee; and (5) a fairly big sum of money bad been
invested in India in the purchase of property without
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S.C.R.
SUPREME COURT REPORTS
891
money being received from Colombo. On these facts
z96o
the Tribun~l said :
S.N. Namasivayam
' In view of these defects, we are clearly of
Chettiar
opinion that the correct profit could not be deduced
v.
from the . .books produced by the assessee, and Commissioner of
accordingly hold that proviso to Section U of the
Income-tax,
h
,,
Madras.
Act applies in this case. The question, t ereiore,
is regarding the estimate.'
Kapur J.
After giving this finding the Tribunal accepted the
turnover as shown in the appellant's books. In
making the computation of profits the Tribunal took
into consideration the following matters: that the
export of food grains from India was prohibited
except under a license, that there was an acute
shortage of cattle fodder in Ceylon and the appellant
had to resort to dubious means. in order to obtain
grains, that during a substantial portion of the year
of accounting there was no price control in Colombo,
that as the appellant was a manufacturer of forage
by mixing several kinds of grains and powdering
them and sold them in packets of various weights,
the appellant must have made higher profits than
persons who deal in grain only. Keeping all this in
view the Tribunal was of the opinion that the rate of
15 per cent adopted in regard to imported grains was
not too high but in the case of local purchases it was,
and therefore reduced the rate of profit in the latter
case t'o 12i per cent. It was on this material that
the Tribunal adopted the figure of profit as estimated
by the Income-tax Officer, and in order to support
this opinion further, the Tribunal remarked that in
certain cases which had come to its notice the rate of
profits 'went up to 20 per cent.'
On the basis of this remark it was argued that the
principle of natural justice had been violated in that
the Tribunal had taken into consideration the rate of
profit in other cases without giving an opportunity to
the appellant to explain those cases and relied upon
Dhakeshwari Cotton Mills Ltd. v. The Oomff!issioner of
Income-tax, West Bengal (1) where a violation of the
fundamental rule of justice, i.e., where the information was not disclosed to the assessee and no
opportunity was given to rebut that material, waa
(I) (l955l I. s.c.R, 94l
.
892
SUPREME COURT REPORTS [1960 (2)]
z960
held to be a ground for interference with the order of
SN N --.
the Tribunal. In our opinion, no such case arises in
• . amasivayamth
t
1
1'T
• £
t•
.
Dh k h
Chettiar
e presen appea . L,o m orma 10n, as m
a es -
v.
wari's Case was supplied to the Tribunal by any one
Commissioner of and taken into consideration by it, and therefore it
Income-Tax,
was not necessary to give any such opportunity as
Madras.
the appellant contends for. In the present case the
Kapur J.
Tribunal has held that from the method of accounting
adopted by the appellant correct profits could not be
deduced because of the various reasons which have
been set out above and the reference to profits made
in other cases was only by way of supporting that
conclusion. It was not the basis on which the
conclusion was formed nor the basis on which the
percentage was arrived at.
As a matter of fact, the Income-tax Officer who
also rejected the accounts of the appellant had also
given similar reasons. He had held that there was
absence of vouchers, that the stock account and the
manufacturing account had not been kept or
produced, that the cheques of other parties had been
credited in the accounts of the appellant which had
not been explained and that there was purchase of
goods and property by the appellant without there
being sufficient cash in hand. The Income-tax Officer
also said that in other cases where grains were purchased in India and sold in Colombo the rates of
profit were higher, ranging between 20 per cenb and
39 per cent. He then Worked out profits in respect
of various grains in the case of the appellant and
found that the average rate of gross profit worked
out to 15·8 per cent., and in his opinion the gross
profit in fodder should have been higher. He further
took into consideration the fact that Colombo was
bombed in April 1942, resulting in panic in that town
and therefore during a portion of the accounting year
the appellant might not have made the same margin
of profit. He estimated the sales at twenty lacs and
the gross profit at three lacs, thus arriving at a figure
of 15 per cent on the turnover. It appears to us that
neither the Income.tax Officer nor the Appellate
Tribunal relied upon the profits made by traders in
other cases as a basis for arriving at any conclusion
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8.0.R.
SUPREME COURT REPORTS
893
as to the percentage at which the income should be
z96o
computed and that they used that material for a 5 N I\' -- .
d ·cc
It .
t
1 d
b f 1 "f th . . amas1vayam
iuerent purpose.
is ex reme y
ou t u
1
e
Chettiar
·
order of the Income-tax Officer or the Tribunal would
v.
have been different if no reference had been made to Commissioner of
the rate of profits in other cases. In other words,
Income-Tax,
~·
the profits in other cases were not the reason for
Madras.
holding that 15 per cent. profit was a proper rate but
Hapur 1.
merely an ancillary support to that conclusion.
It may be mentioned that throughout in his grounds
of appeal the appellant has emphasised the inapplicability of s. 13 of the Income Tax Act and the proviso
thereto, but not to this particular violation of principles
of natural justice which was emphasised and particularised before us. In his appeal to the appellate Assistant
Commissioner no objection was taken to the reference
by the Income-tax Officer to the rate of profits made
by other dealers in grains. In the grounds of appeal
t.o the Tribunal also there was no such objection. In
the application under s. 66(1) there was no specific
ground taken and in the application under s. 66(2) the
matter does not seem to have been raised. The order
of the High Court, dated February 26, 1953, does not
show that any such question was raised before it ; all
it shows is that the appellant's books of account were
found to be defective and afforded no data for arriving
at correct profits of the business. The order also
refers to the non-production of invoices, the unexplained steep fall in profits made during the year
when compared with the previous .years. The High
Court could not find any legal flaw in the order of the
Appellate Tribunal to justify an order for directing the
case to be stated. -In the grounds of special leave to
this Court no pointed reference was made to the
n;iaterial which is now alleged to have been used by
the Tribunal without giving an opportunity to the
appellant to explain that material. An amended
petition by leave of this Court was filed on April 28,
1954, ·and there also no such pointed reference was
made to the material to which objection is now being
taken before us. Dhakeshwari's Gase (i) cannot, in
our opinion, apply to the facts of this case.
(rl [19~~l I, s.c;.R. ~4l
894
SUPREME COUHT REPORTS (1960(2))
r960
It was then urged that the four reasons given,
--
which we have set out above, could not make s. 13
S.N. Namasfoayam
1. bl
u
th
• t•
f
1
Chettia' ·
app rna e.
1' or
e
reJeC ton o accounts severa
v.
reasons were given by the Appellate Tribunal; one of
Commi»ione.of these reasons was the non-production of stock registers
Income-Tax,
and manufacturing accounts. This reason was given
Madras.
by the Income-tax Officer and adopted by the AppelKaput].
late Tribunal. It was submitted that the non-production of stock account was not such a defect as to
entitle the Taxing Authorities to reject tbe books and
apply the proviso to s. 13. Reliance was placed on the
judgment of the Punjab High Court in Pandit Brothers
v. The Commissioner of Income-tax, Delhi (1 ).
The
facts in that case were very different. The Income-tax
Officer there added a certain sum to the assessee's
profits on the ground that the expense ratio was too
high and the profits disclosed were too low and there
was no stock register. The finding in that case was
that the assessee maintained regular accounts of his
purchases and sales and there was no finding by the
Income-tax Officer that ·in his opinion the income
could not properly be deduced therefrom. Khosla, J.
(as he ·then was) there said :
'There is no finding that there was material
before the Income-tax Officer to lead him to the
conclusion that a proper statement ofincome, profits
and gains could not be deduced from the material
placed before him. All he said was that the profits
appeared to be somewhat low and there was no
stock register.'.
The want of a stock register was, in that particular
case, not a very serious defect because the account
books had been found and accepted as correct and
disclosed a true state of affairs. It cannot therefore
be said that that case laid down as a proposition oflaw
that the want of a stock register by which a proper
check could be made was not such a serious defect as
to make the proviso to s. 13 inapplicable.
The importance of such register was pointed out by
the Nagpur High Court in Ghanshyam Das Permanand
v. Commissioner of Income-tax, C.P. & Berar (2).
In
cases such as the instant case, the keeping of a
(I) [I954) 26 l.T.R. I59•
(2) [r952) 21 I.T.R. 79, Sr.
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S.C.R .
SUPREME COURT REPORTS
.895
. stock register is of great importance because that is a
r91io
means of verifying the assessee's accounts by having a S.N. Namasivayam
' quantitative tally'. If, after taking into account all
Chettiar
the materials including the want of a stock register, it
v.
is found that from the method of accounting correct Commissioner of
Profits of the business are not deducible, the operation
Income-Tax,
Madras.
of proviso to s. 13 of the Income-tax Act would be
attracted, Bombay Cycle Stores Company Ltd. v.
Kapur].
Commissioner of Income-tax (1). It may also be added,
as was he1d by this Court in Commissioner of Incometax Y. MacMillan & Co. e), that the Income-tax Officer,
even if he accepts the assessee's method of accounting,
is not bound by the figure of profits shown in the
accounts. It is for the Income-tax Authorities to
consider the material which is placed btlfore them and,
if, after taking intg account in any case the absence
of a stock register coupled with other materials they
are of the opinion that correct profits and gains cannot
be deduced, then they would be justified in applying
the proviso to s. 13. In our opinion therefore when
the Tribunal applied the proviso to s. 13 because of
the various blemishes which were pointed out by the
Income-tax Officer and accepted by the Appellate
Tribunal, it cannot be said that there. was any error
in the order of the Appellate Tribunal justifying the
interference of this Court under Art. 136.
In regard to the Appeal No. 220 of 1955 for the
assessment year 1946.-1947 the objection raised was
that the Tribunal had committed the same error in
that it took into consideration the earlier decision of
the Tribunal 'in an identical situation ' i.e., in the
case of the same assessee in regard to previous years.
As we have held that there was no error in the order
of the Tribunal in regard to the previous years, it
cannot be said that this observation of the Tribunal
was in any manner erroneous. This appeal should
therefore be dismissed.
The other appeals which arise under the Excess
Profits Tax Act for the various chargeable accounting
periods depend upon the result of the Income-tax
(1) [1958] 33 I.T.R. 13.
(2) [1958] 33 I.T.R. 182, 197.
II4
896.
SUPREME COURT REPORTS [1960 (2)]
I960
aSSeSSment appeals and, aS We have dismissed those
-
appeals, these appeals also must be dismissed.
S.N. Namasfoayam
I th
lt !] t]
.
]
d"
.
d
"th
Chettiar
n
e resu
a
ie six a ppea s are 1sm1sse
w1
v.
costs.
As the appeals were consolidated there will be
Commissioner of one set of costs.
Inconie~Tax,
Madras.
February 3
Appeals dismissed.
MOTI RAM
v.
SURAJ BHAN & OTHERS.
(P. B. GAJENDRAGADKAR, K. SuBBA RAo AND
K. c. DAS GUPTA, JJ.)
Rent Control-Ejectment--Statute permitting ejcctment for
reconstruction of building~Subscquent atnendment making of provision more stingent--Whcther retrospective-Statute making appellate
order final-Before making of order statute amended by providing
revision to High Court-If amendment applies to pending appealEast Punjah Urban
Rent Restriction Act, r949 (E.P. 3 of r949,
ss. r3(3)(a)(iii) and r4(4)-East Punjab Urban Rent Restriction
(Amendment) Act, r956. (Punj. 29 of r956). ss. 2 and 3.
On August 28, 1956 the respondent l applied to the Rent
Controller for the eviction of the appellant from a shop under s. 13
of the East Punjab Urban Rent Restriction Act, 1949, inter alia
on the ground that he wanted to reconstruct the shop.
On
the date, s. 13(3) (a)(iii) of the Act provided that a landlord may
apply for the eviction of his tenant if he required the building
for reconstruction or for its replacement· by another building or
for the erection of other ,building.
Section 15 provided for an
appeal from the order of the Rent Controller and sub-s. (4) of
s. 15 provided that the decision of the appellate authority, and
subject only to such decision, the order of the Controller shall be
final.
By Amending Act 29 of r956, which came into force on
September 24, 1956, ss. l3(3)(a)(iii) and r5
were amended;
amended
s. l3(3)(a)(iii) permitted ejectment if the landlord
required it to carry out any building \Vork at the instance of the
Government or Local Authority or any Improvement Trust under
some improvement or development scheme or if it had become
unsafe or unfit for human habitation; and new s. 15(5) introduced
by the amending Act, gave to the High Court power to call for
and examine the records relating to any order passed under the
Act for satisfying itself as to the legality or propriety of such
order. The application for eviction was dismissed by the Rent
Contrpller and an appeal to the appellate .authority also failed.
Respondent l went to the High Court in revision and the High
Court decreed eviction holding that the shop was required for
'
-
I